Eric Sprott on Sunday February 10th , 2013

Today billionaire Eric Sprott told King World News, “I’m sure we’ll be seeing $100 and $200 prices for silver.” Sprott also said that despite the advance in global stock markets, “There is no doubt that the path we’re on is not sustainable both for the economy, and for the financial system.”

Here is what Sprott had to say: “We had a negative print on GDP in the 4th quarter. The fact is I think we are on shaky ground. The shakiest part of the ground is the new numbers put out by the Department of the Treasury showing under GAAP what the true deficit was last year.

It includes both the cash deficit, which I think was around $1.2 trillion plus the increase in the present value of known obligations. Together those two added up to a deficit of $6.6 trillion for the year. Shadowstats suggested this year, 2013, the numbers could be pushing close to $10 trillion.

Professor Kotlikoff suggested the known, future liabilities are $220 trillion. When you reference those numbers against a GDP of $16 trillion, it’s obvious that the obligations can’t be met....

“We’ve seen with various countries when they’ve had to impose austerity, had to cut pension payments, cut civil service salaries, and I’m using Greece and Spain as my two examples, you immediately had unemployment go to 25%. You had retail sales fall by double-digits. I think that has to happen.

We have all of these obligations that have never been funded, and the time is coming when the money is going to start going out the door. I’m just not a believer in the sustainability of the economy when I look at those numbers.”

Eric King: “When you throw numbers like that around, Eric, what about the sustainability of the financial system?”

Sprott: “There is an impact. If people someday have to face the fact that they are not going to receive a pension, or some benefit they are receiving the amount is going to be cut, you cause a serious economic slowdown. This then impacts everything financial because the ability to pay the debts off is diminished because everyone’s income is down.

I’ve always worried about the leverage in the financial system. It will come to pass. There is no doubt that the path we’re on is not sustainable both for the economy, and for the financial system.”

Eric King: “Eric, we have to bring up silver as well for the silver bulls. Your thoughts on that market?”

Sprott: “I’m quite impressed by the (US) Mint sales in January, even though they only sold it for about half the month. It’s obvious from all of the discussions here from various coin dealers that demand is very brisk.

The beauty of silver of course is there is not much inventory in the world. The buying at the Mint, as a proxy, suggests that people are putting as many dollars into silver as they are putting into gold. So they are buying 50 times more silver than gold.

The piece we did a couple of months ago suggested that for investment purposes you can only buy about 3 times more physical silver than gold. Well, if you are buying it at 50 to 1, and I see it in our Trust issues that we have, we’re buying 50 times more silver which is an absolute impossibility (to sustain), I think silver will by far outperform gold. And needless to say I’m incredibly bullish on gold, so I’m sure we’ll be seeing $100 and $200 prices for silver.”